“Culture is formed out of the ‘condition’ of human experience and human imagining.” (Lewis, 2002) As time has progressed, the way in which people view the world has changed. The rise in multi-national companies has seen an increasing number of researchers assessing whether the huge number of global cultures can be “reduced to a more limited set of cultures with similar characteristics.” (Briscoe and Schuler, 2004)
Power Distance
“This is a measure of the extent to which people expect and accept that power is unequally divided in society, including the workplace.” (Leat, 2007) The higher the PDI figure is, the more hierarchical the country or company. Malaysia has a PDI of 100, signifying a more unequal distribution of power.
Individualism vs Collectivism
“Individualism… preference to be able to work independently and to praise individual decision-making. Collectivism… preference for collective organization of work and responsibility.” (Harzing and Ruysseveldt, 2004) A lower score means a more collectivist attitude.
Masculinity/Femininity
“In a masculine culture the dominant values are said to be ambition, assertiveness, performance… in a so-called feminine culture values such as quality of life, maintaining personal relationships… are emphasized.” (Rees and Edwards, 2011) Sweden has a very low masculinity score, meaning that it is much more focused on relationships and management through discussion and compromise.
Uncertainty Avoidance deals with a society's tolerance for ambiguity. It indicates to what extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations.
Long Term Orientation
"Long Term Orientation stands for the fostering of virtues oriented towards future rewards, in particular perseverance and thrift.” (Hofstede, 2001) China has a LTO figure of 87, meaning that it has a clear focus on the long-term benefits of decisions that it makes.
B) Hofstede’s theory is well known globally; thanks to the way that it can be applied to HRM practices worldwide. Companies can use Hofstede’s framework to assess any alterations that may be needed whilst looking to expand into new markets, or simply whilst doing business with companies based abroad.
For training and development, the level of uncertainty avoidance could impact on the methods used. “For high uncertainty avoidance, training tends to be task-specific, highly structured.” (Paik, Chow and Vance, 2011) Greece has a very high UAI figure of 100 (Hofstede, no date) and is likely to place more emphasis on Training & Development of its employees. The CRANET Executive Report (2011) indicates that Greek nationals evaluate the effectiveness of their training at 69.0%. Comparatively, Sweden has a low UAI figure of 29 and the CRANET report shows that its nationals only rate the effectiveness of their training at 34.7%. From this, we can begin to see how a higher uncertainty avoidance figure could relate to less ambiguity in training and development of employees. The more succinct and relevant the training is, the more effective it is likely to be, as demonstrated from the comparison example above.
A key manifestation of higher levels of individualism is the adoption of Performance Related Pay (PRP) systems linked to formal appraisals of individual performance. (Rollinson 1993; Roche and Turner 1994) For example, Switzerland has an individualist score of 68 (Hofstede, 2016) and the CRANET Report (2011) identifies that 84% of companies within Switzerland operate a PRP scheme. Similarly, Russia has a lower figure of 39 on the individualist scale, indicating that it is perhaps more collectivist. According to the CRANET Report (2011), only 34% of companies in the country operate a PRP scheme, supporting the idea that perhaps it is more effective in countries with more individualist tendencies. Erez (2000) suggests that equal pay compensation should be offered in collectivist and low power distance cultures.
With a high masculinity index, HRM must be aware that management may resist initiatives that empower employees with leadership responsibilities or promotional systems that promote women into managerial positions. (Friedman, 2007) Slovenia has a masculinity score of 19 (Hofstede, 2016) and when we look at the Career Development section on the CRANET Report (2011), we can see that they have ranked the use of development techniques on a scale of 0-4, with 0 being the lowest. The EU Average score is 1.29 – Slovenia scores roughly 1.90 on this scale. Comparatively, Slovakia has a masculinity score of 100 and scores roughly 0.85 on this Career Development scale. From this, we can support the statement made by Friedman, whereby more masculine countries are less welcoming to promotional, or career development systems.
Cultural theories have heightened my awareness of the factors affecting HRM across the globe, and I now have a further understanding of some of the external factors that can influence HR policies. Whilst I was already aware of Hofstede's theory, I had never really appreciated its application in a professional environment. Cultural theories are of paramount importance when considering IHRM, as they could 'make or break' a company.
However, whilst cultural theory can provide a useful conceptual tool for understanding and judging comparative manifestations of HRM across borders, arguably its most important contribution relates to the awareness it raises of the potential for misunderstanding in international team working and cross-cultural ambiguity. Taking this into consideration, we can begin to look at ways to minimise these issues from occurring.
To be successful globally, companies need to implement effective HRM policies around the globe that are tailored to each location. Personally, I do not believe that there is a 'one size fits all' HRM method – every company and every country is different, and will need different policies accordingly.
Take individualism for example – in a country where individualism is high, employees are likely to be more self-centred and looking out for their own interests. In this instance, a 'group reward scheme' is unlikely to be welcomed by employees, who would want to be rewarded for their individual performance, most likely with a cash reward. When looking to implement a reward scheme, this is something that should be taken into consideration.
Similarly, power distance can impact greatly on a company looking to expand from the UK into Malaysia, for example. The UK has a relatively low PDI figure of 35, compared to Malaysia with a figure of 100. This means that the company would not simply be able to 'lift and drop' its existing HRM practices and expect them to work exactly as they had in the UK. Malaysia responds much better to a hierarchical structure, whereas the UK is more used to a flatter organisational structure. As such, Malaysian employees may not be able to adapt to this difference in organisational structure, and prefer to be led rather than be given too much autonomy over their workloads.